The price of oil continues to trade above $US100 a barrel, enabling Australia to attract cashed-up oil and gas majors with the balance sheets to develop some of the country’s vast resources and reserves.

More than $170 billion of capital has been pledged for liquefied natural gas projects that are under construction, with a further $330 billion of developments on the drawing board in the period to 2020.

But as the doors swing open in Adelaide to the Australian Petroleum Production & Exploration Association conference, the annual talking point for energy executives, there’s a growing feeling that we may have seen the peak of the investment cycle, particularly in the gas sector.

In Australia, companies are worried about construction and project execution risks, with high costs at the top of the list of concerns.

In an address to the conference today,
Santos
chief executive and APPEA chairman
David Knox
will tell delegates that Australia should not kid itself that it can compete with lower cost rivals for investment dollars. “Compared with North America, we must remind ourselves that Australia is not a low-cost investment destination," Mr Knox will tell the conference. “And as costs increase locally, new global competitors are emerging."

Construction and labour costs are the inevitable side-products of any resources boom, but where executives are developing frustrations is over the issue of unnecessary regulatory hurdles.

APPEA will today call for changes to environmental approvals related to coal seam gas production and integrating changes to the scope of projects. It will also ask for a more realistic line from both state and federal authorities over local content quotas, given the long lead times of investments in the sector.

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It’s unlikely to get a particularly receptive ear, given the well-marshalled environmental and community opposition to high profile developments, but its point about the duplication in a confused regulatory landscape is certainly justified.

At a corporate level, all eyes will be on
BHP
petroleum head
Mike Yeager
this morning.

Investors’ fears over a potential write-down of BHP’s US shale assets have been shrugged off by the world’s largest mining company since US gas prices dipped below $US2 per million British thermal units last month. While Mr Yeager has an excellent relationship with BHP boss
Marius Kloppers
, he must be feeling the heat given there’s no likely upturn in prices soon.

His speech today is expected to focus on the long-term prospects of its $US20 billion shale play in the US.

In a sense, he is right to look into the future. The ultimate success of its mega-investment in shale can’t be fully judged for some years, but given the resource giant’s newfound preference for a conservative investment strategy, it will be fascinating to get a sense of how Mr Yeager plans to talk his way out of what looks like an ill-timed acquisition.